Do You Have to Charge Sales Tax for the Products You Buy or Sell on

If you plan to sell merchandise on, either as an individual, or as a company (business), you must take a great many things into consideration, such as whether to use the “Auction” or simply list products, how much to charge for shipping, and if you need to collect sales tax.

Most states charge sales tax on goods sold within their state. A lot of marketplace and web site sellers do not know or understand why they may need a sales tax number. If you only run a few listings, or auctions, for old inventory or used goods, you likely need not worry about it. However, if you regularly list products, and offer auctions, or want to sell as a small/large business you will need to obtain a sales tax resale certificate (permit/license/tax ID).  Not all states require sales tax, but most do, so familiarize yourself with the laws in your state, county, and city, before getting down to business.

Note that even if you do not have a presence in a state, your activity on a marketplace may create a “click through nexus”.   States with click-through nexus policies require out-of-state vendors to collect and remit sales tax when they compensate residents for sales made via links on their websites.  There are typically revenue levels, or other limits which determine whether or not you have nexus in a given state, and state policies vary.   For example, in California, a click-through nexus is triggered if a business generates more than $10,000 in in-state sales during the preceding four quarterly periods.   In Connecticut, it’s triggered if a business generates more than $2,000 in the same time frame. You should consult with a tax advisor before conducting new business in other states or regions through online marketing or advertising.   A click on a website that results in orders and compensation, can trigger nexus in a new state.

To apply for a resale certificate or seller’s permit, you will need to contact your state’s Department of Revenue, Treasury Department or Board of Equalization. Along with the certification, you will receive documentation outlining the specific taxes you must collect. You will likely be required to file your taxes monthly or quarterly to return the collected tax revenue. You are typically only obligated to collect sales tax only from buyers who reside in the same state where you conduct business, or if you have a “nexus” in other states.

Below is more information on why it may be required to have a state sales reseller permit (or a Resale certificate or Resale Number) to operate legally.

SELLING:  If you sell products or services which are taxable on the internet and ship them to someone in your state which are not exempt, then you are required to charge the buyer sales tax and forward that tax to the taxing authority. At the time of this writing, if you only sell less than $4 million in revenue annually, then you do not have to collect or pay sales tax on sales where you deliver the goods to an out-of-state address.

BUYING:  You can also purchase items that you plan to resell, without paying sales tax on them, if you have proper tax exemption status.

WHOLESALING:  Most wholesale companies which sell on the internet require a sales tax certificate . Most manufacturers, or other product sources, will ask for a copy of your resale certificate before they will sell to you at wholesale prices. If your state does not require charging for sales tax, (ie., Oregon and Idaho) you should be able to obtain a Business License that will serve the same purpose as a resale license.

EXEMPTIONS:  Most, but not all, states will require you to collect sales tax from buyers in the online marketplace, however your resale certificate documentation will outline, in detail, any exemptions that exist in your state.

Creating a Tax Table in Seller Marketplace Tools

If you have registered as a Seller and determine that you must collect sales tax from buyers in your state, or other states, enables you to automate the process. First, log in to your Seller account and navigate to the “Tax Manager”.  Complete the options you require for your state and enter your tax rate.  

Note you can add Geo Zones, Tax Rates, and Product Tax Classes.  The cart will automatically calculate and add the sales tax to the final price of any items sold to your buyers.

If you are a Tax Exempt customer and would like your account noted as Tax Exempt, please upload the proper documentation within your Account page, and visit the Support Center to contact the Administrator to make your request.

Please visit the Support Center to if you have any further question or concerns.

DISCLAIMER:  The information contained
within this website is provided for informational purposes only and is
not intended to substitute for obtaining accounting, tax, or financial
advice from a professional tax planner or financial planner.
Presentation of the information via the internet is not intended to
create, and receipt does not constitute, a tax planner-client or
financial-planner-client relationship. Internet subscribers, users and
online readers are advised not to act upon this information without
seeking the service of a professional tax and/or financial planner.

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